If land becomes less valuable in residential use than in commercial use
A) the supply of land available for commercial use should increase and the supply of land for residential use should decrease.
B) there can be no change in the allocation of land because land is fixed in supply.
C) there will be no change in the allocation of land, as there is no responsiveness to price changes by suppliers of land.
D) the supply of land for commercial use will become perfectly inelastic and the supply of land for residential use will become perfectly elastic.

Question

Quizplus · Accepted Answer

When land becomes more valuable for commercial use than residential use, it is likely that landowners will shift their land from residential to commercial purposes to maximize their returns. This means the supply of land for commercial use will increase as more land is allocated for that purpose, and the supply of land for residential use will decrease as less land is allocated for that purpose.

If Land Becomes Less Valuable in Residential Use Than in Commercial